Rupert Murdoch's News Corporation made "veiled threats" that if Vince Cable did not approve the company's proposed £8bn takeover of BSkyB, his Liberal Democrat party would be "done over" by its newspapers, the business secretary said on Wednesday.

Giving evidence to the Leveson inquiry, Cable – who was responsible for adjudicating on the BSkyB bid in its initial stages – said he had heard about the company's apparently aggressive stance "directly and indirectly" from unnamed colleagues in November or December of 2010.

Cable added that he thought "somebody used the phrase 'done over' by the News International press" and that "I took those things seriously". He believed that the threats emerged "in conversation" between Lib Dem colleagues and News Corp's lobbyist Frédéric Michel, but added that "I can't be absolutely certain".

The cabinet minister said that he was told directly by "one individual" that Michel had said this, "but he told me in confidence, and I don't want to breach that confidence". The minister said he had no record of the meeting with the person who told him about Michel's alleged remarks, and refused to name the individual concerned.

Cable said he believed News Corp was trying to get him stripped of his role by proving political bias. "News Corp representatives were trying to build up a case that it was politically motivated and were doing this by systematically going around my colleagues, maybe seeking their views or putting words in their mouths," he said.

In his witness statement, Cable said: "The reports suggested that News Corporation representatives were either trying to influence my views or seeking material which might be used to challenge any adverse ruling I might make … These colleagues expressed some alarm about whether this whole affair was going to lead to retribution against the Liberal Democrats through News International newspapers."

The Guardian understands that the report of the threat was relayed to Cable by a fellow cabinet minister, but there is doubt whether this extended beyond an anecdotal conversation. It does mirror similar demands made to the office of the Labour leader, Ed Miliband, by News International to tone down criticism, and indeed to co-operate by writing articles for the newly launched Sunday Sun.

Cable's claims were challenged at the end of three hours of testimony by Rhodri Davies, counsel for News International. The minister conceded he had no record of the meeting with the person who told him Michel's alleged remarks, and said the conversation happened "in the period after I made the intervention notice" on 4 November and 21 December 2010, when he was stripped of responsibility for adjudicating on the bid.

Davies said that "without knowing who is supposed to have been threatened and when, it's extremely difficult for Mr Michel or anyone else to respond to the allegation". Cable agreed and said he was "trying to explain the context" in which he made unguarded comments to two undercover Daily Telegraph journalists that he had "declared war on Murdoch".

Those remarks, recorded by the newspaper in December 2010, were leaked to the BBC, and in the resulting furore Cable was stripped of his role, because they implied he had prejudged his decision, and the task was handed over to the Conservative culture secretary, Jeremy Hunt. Cable was supposed to judge the takeover in a "quasi-judicial" or non-party-political manner.

Hunt, who gives evidence on Thursday , is already under pressure about his own handling of the Sky takeover, which he came very close to approving until the bid was derailed by public and political outcry following the revelation that the News of the World had hacked into the phone of murdered schoolgirl Milly Dowler.

But while Hunt had two minuted meetings with News Corporation and asked his former special adviser Adam Smith to act as a link to News Corporation in January, Cable's testimony demonstrated that he was determined not to meet UK company boss James Murdoch, and his policy special adviser, Giles Wilkes, had only occasional engagement with Michel.

Cable told Lord Justice Leveson it was possible to separate his personal feelings about the Murdochs and the bid and make a decision over whether to approve it based on the evidence in front of him.

When asked about his personal view, the business secretary told the inquiry that the Murdochs exercised "disproportionate political influence" through their newspapers, but denied he let this affect his view of the bid. "I wasn't submitting this evidence because it was relevant to the decision," he said. "I was expressing an opinion which is loosely based on observing what was happening in political life and what had happened in my 12 years in parliament. My views about this company were actually quite nuanced. There was disproportionate influence and I thought the leaders of the main parties had got too close to them."

Cable said ministers should remain in charge of some competition issues and called for a clear definition of plurality in terms of media ownership. In the afternoon, the Leveson inquiry heard from the justice secretary, Ken Clarke, who argued that journalists "are entitled to bribe" in extreme cases. Clarke, who was in the job when the Bribery Act came into force last summer, said there were instances where bribery might be the only way to substantiate a story.

"I do think journalists are entitled to bribe in an extreme case if it's the only way in which they can get information about some major public scandal," he said. "For example, if the Daily Telegraph used bribery to obtain evidence of MPs cheating on their parliamentary expenses, I will be deeply shocked if anybody had prosecuted the journalist for using bribery," he said. He added that he didn't think the same justification could apply to journalists seeking information about the "sex life of a footballer".

He went on to reveal that in 1993 he was the victim of alleged press bribery. "When I was first appointed chancellor of the exchequer I had to move my bank account because my bank advised me that journalists were trying to bribe the staff of the village branch where I had my bank account. This would have been regarded as perfectly customary in those days," the veteran minister said.